Abe Lincoln vs. the Justice Department

By Charles E. Grassley;

Published: January 16, 1993

WASHINGTON—
One of America's largest medical companies, National Health Laboratories, agreed last month to pay the Government $110 million to settle a lawsuit for unnecessary medical tests billed to Medicaid and Medicare. In July, General Electric agreed to pay a $59.5 million civil settlement stemming from a conspiracy between G.E. executives and an Israeli general to charge the U.S. for goods and services that were never provided. In June, the successor to the Singer Corporation, the CAE-Link Corporation, agreed to pay $55.9 million for overbilling the Pentagon on more than $1 billion worth of contracts for flight simulators.

These tax dollars were restored to the Treasury not because of any Justice Department prosecutorial zeal but in spite of the department's efforts. The cases were brought by courageous employees of the companies. Using a modern version of a law drafted in 1863 by Abraham Lincoln to combat war profiteers, they sued their employers on behalf of the United States in return for a share of the Government's reward.

Unfortunately, since Representative Howard Berman, Democrat from California, and I rewrote the whistle-blower provisions of the False Claims Act in 1986 to make them a better weapon against fraud during the defense buildup of the 1980's, the Justice Department has been consistently hostile to whistle-blowers. This attitude confirms the cynicism that brought Lincoln to make it possible for citizens to sue: you can't count on the bureaucracy to protect the taxpayer.

President-elect Clinton's nominee for Attorney General, Zoe Baird, may have a defense contractor's perspective on whistle-blowers. As counsel to General Electric, she lobbied for broader exemptions to the False Claims Act including a loophole for defense contractors that "police" themselves. She also helped argue that whistle-blower lawsuits are unconstitutional, claiming they infringe on the Government's "exclusive right" to protect tax dollars.

Despite the Justice Department's antagonism, the amendments have been a great success. Overall recoveries to the Treasury have increased from $35 million a year to $350 million a year since 1986 -- a total of nearly one-half billion dollars. Last year, more money was recovered in whistle-blower suits than in all other suits brought by the Justice Department.

Even more money would come in if the Government had a better attitude. The Justice Department, which has a statutory right to join these suits by whistle-blowers as a co-plaintiff, regularly attempts to cut the whistle-blower out of the case. There is nothing the whistle-blower can do about it. Often the department argues at the outset for the whistle-blower's dismissal from the case. If that's unsuccessful, Government lawyers often try to limit the plaintiff's recoveries. Justice Department policy keeps the whistle-blower in the dark about the case's progress.

This hostility was summarized by Federal District Judge Carl B. Rubin of Cincinnati last month. In a ruling against G.E., he wrote that the "pattern of behavior in these cases by the Department of Justice has always been a mystery. The use of a [ whistle-blower ] is nothing new . . . . In view of their widespread use, it is worthy of note that the Department of Justice has considered such individuals as adversaries rather than allies. This is not the first case where this court has noted the antagonism of the Justice Department to a whistle-blower. The reason continues to be unknown, but the attitude is clear."

One reason for the department's antagonism may be a legitimate concern that whistle-blowers take a share of the Government's award. Even so, the department cannot ignore Congress's findings: awarding a share of the damages is necessary to attract whistle-blowers who would otherwise remain silent.

Perhaps the Justice Department doesn't want to acknowledge Congress's conclusion that the department is unable to uncover all the fraud that taxpayers suffer. And perhaps the executive branch dislikes citizens interfering in the cozy relationships it has with defense companies and other public contractors. In October, Attorney General William Barr complained in a speech to the American Corporate Counsel Association that whistle-blower lawsuits "constitute a burden -- and a severe burden we believe -- on contractors who are defending them."

Obviously, Bill Clinton and his Attorney General need a new policy that aids whistle-blower lawsuits. If Ms. Baird is confirmed, she must resist any prejudice from her years at G.E. Her new clients, the taxpayers, expect vigorous prosecution of public-contract fraud.

Charles E. Grassley, Republican of Iowa, is a member of the Senate Judiciary Committee.